First quarter 2007 earnings
Philippe Capron May 15, 2007 Member of the Management Board & Chief Financial Officer Very good results for the first quarter 2007
In euro millions Q1 2007 Growth IFRS standards - unaudited
Revenues 5,020 +5.3%
EBITA 1,274 +21.7%
Adjusted net income (ANI) 771 +22.8%
2 Main events
Successful launch of World of Warcraft: The Burning Crusade, Blizzard Entertainment’s first expansion pack
Canal+ / TPS merger finalized on January 4, 2007 TPS is included in the results of Canal+ Group Launch of the new CanalSat offer
Acquisition by Maroc Telecom of 51% of Onatel (Burkina Faso’s incumbent operator) in December 2006 and 51% of Gabon Telecom in February 2007
As part of its « Mobile Centric » strategy, SFR launches Happy Zone and a complementary ADSL option
Vivendi continues to work closely with the European competition authorities on the acquisition of BMG Music Publishing and Télé 2 France
3 First quarter 2007 revenues
Revenues: €5,020m UMG 1,027 -8.7% -4.2% at constant currency +5.3% compared to 2006 1,125
+7.0% at constant currency Canal+* 1,067 +18.7% Group 899
2,096 SFR -1.8% 2,135
1st quarter 2007 Maroc Telecom** 550 +13.9% 1st quarter 2006 483 +16.1% at constant currency rate
In euro millions +117.2% IFRS standards - unaudited Vivendi 291 Games +132.0% at constant currency 134 * Including TPS in 2007 ** Including Onatel in 2007 4 First quarter 2007 EBITA
EBITA: €1,274m -59.6% UMG 57 141 -55.8% at constant currency +21.7% compared to 2006 164 +23.4% at constant currency Canal+ X 5 Group* 33
SFR 643 -3.5% 666
256 +20.2% Maroc Telecom** 213 +22.6% at constant currency rate
1st quarter 2007 X 4.7 1st quarter 2006 Vivendi 107 Games 23 X 4.9 at constant currency In euro millions IFRS standards - unaudited Holding & Corporate 46 * Including TPS in 2007 (36) ** Including Onatel in 2007 5 In euro millions - IFRS Unaudited Universal Music Group
Revenues -8.7% Down 4.2% in constant currency -4.2% c.c* Very strong sales in the UK offset by declines in the US, Japan Digital sales: 1,125 and France reflecting the timing of releases and difficult market 1,027 conditions +54%* Increase of digital sales, representing 15.7% of total revenues versus 9.9% last year 2006 2007
EBITA
-59.6% -55.8% c.c* Non recurring effect in 2006 of the recovery of €50m cash deposit in the TVT matter 141 57 Lower margins from lower sales
2006 2007
Main events UMG maintains its US and increases its UK, France and German market shares
UMG dominates the UK market in the first quarter with nine of the ten best selling albums in the period, according to the Official Chart Company with the top 5 titles: #1. Amy Winehouse, #2. TakeThat, #3. Mika, #4. Kaiser Chief, #5. Snow Patrol
UMG acquires the label Octone in the US (Modern Rock/Pop, with notably the superstar Maroon 5)
* At constant currency rate 6 In euro millions - IFRS Unaudited Canal+ Group
Revenues +18.7% Canal+ France: +24% Acquisition of TPS (Q1 2006 revenues of €146m) 1,067 10.3 million 899 Sustained subscription portfolio growth, with record recruitments in March subscriptions** Continuous increase of digital subscriptions to Canal+ (64%) +439,000* Other operations: + 7% (excluding PSG disposed of in 2006) 2006 2007
EBITA Benefits of initial synergies from the TPS merger: reduced programming costs, and reduced +131 subscriber acquisition and management costs 164 Favorable Ligue 1 broadcasting schedule (3 fewer match days than during the first quarter 2006: €47m)
33 Transition costs: limited impact of €5m on the first quarter 2007 2006 2007 Other operations up, due to the international performance of StudioCanal Main events
Launch of the new CanalSat offer. Canal+ Group announces the launch of TNTSAT (free DTT channels on satellite) Acquisition of premium rights: exclusivity for the TOP 14 Rugby matches and the English Premier League ASTRA will be the only satellite service provider for Canal+ Group Canal+ Group launches Canal+ Chaîne Mobile, a new channel specially designed for mobile phones, available on SFR
* At comparable perimeter, including TPS ** Individual and collective subscriptions to Canal+ France, in mainland France, overseas territories and Africa, including TPS 7 In euro millions – IFRS Unaudited SFR Revenues
-1.8% Network mobile revenues are down -0.9% +2.6%, excluding the impact of the regulated tariffs cuts* 2,135 2,096 Traffic increase of 11.7% 17.9 million Registered customer base up + 3.4% with a better mix customers (postpaid clients up 6.1%) 2006 2007
EBITA Nearly stable EBITDA at €860m -3.5% Reduced revenues and a 1.4 percentage point increase in acquisition and retention costs 666 643 Strong control of other costs €18m increase in depreciation costs 2006 2007 (65% population coverage in UMTS/HSDPA end of 2006)
Main events Successful advertising campaign: new image, new look 3.13 million 3G customers at the end of March 2007 compared to 2.69 million at the end of December 2006 End of March: Launch of Happy Zone nationwide after a successful testing phase in South of France End of April: Launch of a complementary ADSL option for SFR customers (Happy Zone + ADSL)
*21% reduction in mobile voice termination rates from January 1, 2007, 30% reduction in SMS termination rates from mid-September 2006 8 In euro millions - IFRS Unaudited Maroc Telecom
Revenues st +13.9% Consolidation of Onatel: revenues of €33m for the 1 quarter 2007 11.4 million Mobile up 20.5% at constant currency and perimeter: increase in the mobile customers* 550 registered customer base of 32.6% and limited decline in the ARPU (-6.0%) 483 Fixed & internet activities: -4.2% at constant currency and perimeter +33% ADSL customer base up 41%: 418,000 fixed lines at the end of March 2007 2006 2007 vs. March 2006
EBITA
+20.2% Increase in revenues and control of acquisition costs and operational expenses
256 213 Operating margin up 2.4 percentage points to 46.5%
2006 2007
Main events Acquisition of 51% of Gabon Telecom, which is not yet consolidated Launch of the MVNO Mobisud in Belgium on Proximus network, a Belgacom subsidiary
Launch of an unlimited offer for businesses: Infinifix and launch in exclusivity in Morocco of Blackberry ® 8100 and 8700
*Excluding Mauritel, Onatel and Mobisud 9 In euro millions - IFRS Unaudited Vivendi Games Revenues Exceptional success of World of Warcraft: The Burning +117.2% Crusade, Blizzard Entertainment’s first expansion pack: +132.0% c.c* launched in January 2007 in the US, Europe, Australia More than and New Zealand, achieving record scores with more 8.5 million 291 than 2.4m copies sold at retail in the first 24 hours, paying players to 3.5m copies in the first month 134 World of Warcraft launched in Korea in February 2007 2006 2007 Continued growth of paying players
EBITA X4.7 Primarily driven by the World of Warcraft: The Burning Crusade, which offsets: X4.9 c.c* Investment in Sierra Entertainment’s internal studios 107 Expenses related to the start-ups at Sierra Online and Vivendi Games Mobile 23 Revising the 2007 EBITA outlook: we expect a 50% increase over 2006 ( €115m) 2006 2007
Main events Acquisition of Wanako Games, a Latin American studio which developed the Assault Heroes game available on Xbox Live Arcade (XBLA) and 3D Ultra Minigolf Adventures available on XBLA and PC
FreeStyle Street Basketball: commercial launch on May 15, 2007 in North America
World in Conflict, the upcoming major new franchise from internal studio Massive Entertainment, acclaimed at Sierra Entertainment worldwide PR event.
* At constant currency 10 Adjusted statement of earnings
Q1 Q1 In euro millions - IFRS standards - unaudited % Growth 2007 2006 1. Revenues 5,020 4,766 +5.3%
2. EBITA 1,274 1,047 +21.7%
3. Income from equity affiliates 82 68 +20.6%
4. Interest (24) (49) +51.0%
5. Income from investments 2 12 -83.3%
6. Provision for income taxes (246) (178) -38.2%
7. Minority interest (317) (272) -16.5%
8. Adjusted net income 771 628 +22.8%
Earnings attributable to the equity holders of the parent 932 707 +31.8%
11 Increase in Adjusted net income In euro millions IFRS standards - unaudited
In the first quarter of 2007, Adjusted net income increased by 22.8%, to €771m versus €628m at the end of March 2006
This improvement of €143m is due to the following:
+ €227m : 21.7% growth in EBITA + €14m : Increase in income from equity affiliates + €25m : Decrease in interest expense -€68m : Increase in tax expense -€10m : Decrease in income from investments -€45m : Increase in minority interests
12 Adjusted net income to Earnings, attributable to the equity holders of the parent
First quarter 2007:
In euro millions - IFRS standards - unaudited
Adjusted net income 771
Dilution profit Canal+ 239
Amortization of intangible assets acquired through business (60) combinations
Other financial charges and income (42)
Impacts of provision for income taxes and minority interests 24
Earnings, attributable to equity holders of the parent 932
13 Net debt evolution
In euro billions – IFRS standards - Unaudited Interest and taxes Dividends CFFO after paid to Other in cash and other adjustments March 31, 2007 . Dec. 31, 2006 Capex minority interests 0
-1
-2
-3
-4
-5 + 1.2 -0.4 -4.3 -0.3 -6 -1.0 -4.8
-7
-8 Including: Dividends paid to minority interests Commitment of buyback of TF1/M6 SFR: -€316m minority interests: -€1,011m
14 Summary
The strong increase in earnings reflects the good performance of our businesses…
Excellent performance of Vivendi Games and success of the expansion pack The Burning Crusade
Continuous growth at Maroc Telecom
Initial benefits from the Canal+ / TPS merger
…but also non-recurring or calendar impacts on the first quarter:
Canal + Group: Favorable Ligue 1 broadcasting schedule: €47m Transition costs limited to €5m in the first quarter
Vivendi Games: Sales of the expansion pack The Burning Crusade concentrated in the first quarter
Corporate: Positive impact of €73m non-recurring item
15 We confirm our 2007 goals
2007 outlook
Adjusted net income: At least €2.7 billion (1) Dividend: Distribution rate of at least 50% of Adjusted Net Income
(1) After transition costs related to the Canal+ / TPS merger
16 Appendices Universal Music Group: First quarter 2007 key metrics
Best sellers*
Millions of Millions 1st quarter 2007 units 1st quarter 2006 of units
Fall Out Boy 1.6 Andrea Bocelli 2.0 Nelly Furtado 1.5 Ne-Yo 1.6 Akon 1.2 Jack Johnson and Friends 1.5 Amy Winehouse 1.2 NOW 21 1.5 Mika 1.0 Mary J.Blige 1.3
* Physical sales only
First quarter 2007 sales
Publishing 7% Licenses 7% Digital 16%
Other 2% Video 10% Catalog 34% Singles 2% Product Sales 68% New releases 54%
18 Canal+ Group : First quarter 2007 key metrics
Canal+ France net portfolio * (in thousands)
CanalSat Canal+ TPS
2007 5,055 5, 217 10,272
+439
2006 4,735 5,098 9,833
Increase in the number of digital subscribers: at the end of March 2007, Canal+ Le Bouquet represented 64% of the total portfolio of Canal+, compared to 54% at the end of March 2006
* Individual and collective subscriptions at Canal +, CanalSat and TPS in metropolitan France, overseas territories and Africa
19 SFR: First quarter 2007 key metrics
(As of end of March IncludingSRR) Q1 2007 Q1 2006 Growth Customers (in ‘000) * 17,910 17,328 +3.4% Vodafone live ! customers (in ‘000) * 6,423 5,268 +21.9% 3G customers (in ‘000) * 3,133 1,352 +131.7% VNO's clients 756 179 x4.2 12-month rolling blended ARPU (€/year) ** 450 479 -6.0% 12-month rolling postpaid ARPU (€/year) ** 587 634 -7.4% 12-month rolling prepaid ARPU (€/year) ** 199 216 -8.0% Proportion of postpaid customers * 65.4% 63.7% +1.7pt Voice usage (minutes / month / customers) 326 309 +5.5% Traffic (in billions of minutes, 12-month rolling) 68.9 61.6 +11.7% Number of SMS sent (in billions) 1.7 1.6 +10.5% Net data revenues as a % of network revenues (%) ** 13.9% 13.5% +0.4pt Prepaid customer acquisition costs (€/gross adds) 23 23 +1.4% Postpaid customer acquisition costs (€/gross adds) 205 184 +11.4% Acquisition costs as a % of network revenues (%) 6.2% 5.5% +0.7pt Retention costs as a % of network revenues (%) 5.5% 4.9% +0.7pt
* Excluding wholesale customers (MVNO) ** Including mobile terminations 20 Maroc Telecom: First quarter 2007 key metrics
(at the end of March, excluding Mauritel, Onatel and Mobisud) 2007 2006 Growth
Number of fixed lines (in '000) 1,271 1,336 -4.9% Total internet access (in '000) 424 306 +38.6% Number of mobile clients (in '000) 11,372 8,576 +32.6% Prepaid clients (in '000) 10,941 8,228 +33.0% Postpaid clients (in '000) 432 348 +24.1%
21 Vivendi Games: First quarter 2007 key metrics
North First quarter 2007 America Europe WOW Box Retail Price $19.99 €19.99 Burning Crusade Box Retail Price $39.99 €34.99 More than 8.5 million 30 day subscription $14.99 €12.99 paying players worldwide: o/w more than 2m in North America First quarter 2007 China Taiwan Korea o/w more than 1.5m in Europe 30 hour Game Cards $1.86 $4.50 $14.90 o/w more than 3.5m in China 30 day subscription $19.60
Upcoming Releases
World of Warcraft: The Burning Crusade: Traditional Console: Taiwan in April Timeshift China planned for mid 2007 Crash of the Titans PC: Mobile: FreeStyle Street Basketball Variety of new titles World in Conflict from Vivendi Games Mobile Empire Earth III Xbox Live Arcade: Carcassone Battlestar Galactica (also PC)
22 In US$ millions NBC Universal : First quarter 2007 key figures Revenues
-22% Decline due to tough comps in Film and the Olympics in 2006 -8%* 1Q 2006 includes the DVD sales of King Kong 4,482 3,484 1Q 2006 includes $684m in revenues from the Olympics
2006 2007 * Excluding the Olympics in 2006
Segment Profit +6% Network +1% in profit 691 654 Entertainment & Info. Cable +8% in profit
Film, parks & other up 2% in profit 2006 2007
Main events Heroes is a new season hit… #8 ranked prime time show based on A18-49 ratings and the #2 new show ** Announced JV with News Corp to deliver direct-to-consumer premium content … distribution reach 96% of US internet audience. Launched NBCU Digital2Go on mobile platforms. * * A18-49 rating for all primetime programs including sports through 03/25/07 per Nielsen
Source GE : Actual results with revenues at 100% and Segment profit net of after-tax minority interest 23 Income from Equity Affiliates
In euro millions – IFRS - Unaudited Q1 Q1 2007 2006 Income from equity affiliates 82 68
o/w NBCU 65 71
24 Interest
Q1 Q1 In euro millions - IFRS standards - unaudited 2007 2006 Interest (24) (49) Interest expense on borrowings (including swaps) (73) (71) Financing rate (%) 3.95% 4.34% Average outstanding borrowings (in euro billions) 7.5 6.5
Capitalization of interest related to the acquisition of BMG Publishing 15 -
Interest income from cash and cash equivalents 34 22
25 Other financial charges and income
Q1 Q1 In euro millions - IFRS standards - unaudited 2007 2006 Other financial charges and income 197 97 (not included in Adjusted net income)
Capital gain or capital loss on divestiture or investments 240 134
o/w sale of 10.18% of Canal+ France to Lagardère 239 - o/w gain on the divestiture of Ypso - 56
o/w gain on the sale of Sogecable shares - 66
Other impacts of amortized cost on borrowings (7) (6)
Other (36) (31)
26 Income tax analysis
In euro millions - IFRS standards - unaudited Q1 Q1 Difference 2007 2006 Provision for income taxes - P&L (224) (141) (83)
Included in Adjusted net income (246) (178) (68) Worldwide Tax System (year n) 134 145 Tax charge (380) (323)
Not included in Adjusted net income 22 37 (15) Worldwide Tax System (variation of deferred taxes n+1/n) (2) 3 Other taxes 24 34
Taxes paid in cash (371) (321)
27 Net available cash flow
Q1 Q1 In euro millions - IFRS standards - unaudited 2007 2006 1. Consolidated cash flow from operations before capex, net 1,638 1,544
2. Capital expenditures, net (capex, net) (475) (503)
3. Consolidated cash flow from operations (CFFO) 1,163 1,041
4. - Cash income taxes paid (371) (321)
5. - Cash net interest paid (39) (49)
6. + / - Other (includes allowances related to loan repayments) 6 (6)
7. Net consolidated cash flow (CFAIT) 759 665
8. - CFAIT for SFR and Maroc Telecom (415) (400)
9. + Dividends received from SFR 401 150
10. Net available cash flow at the Holding level 745 415
11. - Dividends paid to Vivendi shareholders (April 26, 2007) - -
12. Net available cash flow at Holding level after dividend payment 745 415
28 Glossary
› Adjusted earnings before interest and income taxes (EBITA): EBIT (defined as the difference between charges and income that do not result from financial activities, equity affiliates, discontinued operations and tax) before the amortization of intangible assets acquired through business combinations and the impairment losses of goodwill and other intangible assets acquired through business combinations. › Adjusted net income, includes the following items: EBITA, income from equity affiliates, interest, income from investments, including dividends received from unconsolidated interests as well as interest collected on advances to equity affiliates and loans to unconsolidated interests, as well as taxes and minority interests related to these items. It does not include the following items: impairment losses of goodwill and other intangibles acquired through business combinations, henceforth, the amortization of intangibles acquired through business combinations, other financial charges and income, earnings from discontinued operations, provision for income taxes and minority interests relating to these adjustments, as well as non-recurring tax items (notably the change in deferred tax assets relating to the Consolidated Global Profit Tax System, and the reversal of tax liabilities relating to risks extinguished over the period) › Cash flow from operations: Net cash provided by operating activities after capital expenditures net, dividends received from equity affiliates and unconsolidated companies and before income taxes paid. › Financial net debt: is calculated as the sum of long-term and short-term borrowings and other long-term and short-term financial liabilities as reported on the consolidated statement of financial position, less cash and cash equivalents as reported on the consolidated statement of financial position, as well as derivative instruments in assets and cash deposits backing financing (included in the Consolidated Statement of Financial Position under “financial assets”).
29 Investor Relations Team
Daniel Scolan Executive Vice President +33.1.71.71.14.70 [email protected]
Paris 42, Avenue de Friedland New York 75380 Paris cedex 08 / France 800 Third Avenue Phone: +33.1.71.71.32.80 New York, NY 10022 / USA Fax: +33.1.71.71.14.16 Phone: +1.212.572.1334 Fax: +1.212.572.7112 Laurence Daniel IR Director [email protected] Eileen McLaughlin IR Director Agnès De Leersnyder [email protected] IR Analyst [email protected]
For all financial or business information, please refer to our Investor Relations website at: http://www.vivendi.com/ir
30 Important Legal Disclaimer
This presentation contains forward-looking statements with respect to the financial condition, results of operations, business, strategy and plans of Vivendi. Although Vivendi believes that such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance. Actual results may differ materially from the forward-looking statements as a result of a number of risks and uncertainties, many of which are outside our control, including, but not limited to the risk that Vivendi will not be able to obtain the necessary regulatory approvals in connection with certain transactions as well as the risks described in the documents Vivendi filed with the Autorité des Marchés Financiers (French securities regulator) and which are also available in English on our web site (www.vivendi.com). Investors and security holders may obtain a free copy of documents filed by Vivendi with the Autorité des Marchés Financiers at www.amf- france.org, or directly from Vivendi. The present forward-looking statements are made as of the date of the present presentation and Vivendi disclaims any intention or obligation to provide, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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